Tailor Made Incentives (TMIs) postage credits can only be offered to offset some of the commercial risk you accept by using Royal Mail services in an innovative way – they cannot be used simply to offer a discount off of your normal mailing activity.  You may be eligible for a TMI if you are planning to carry out one of the following activities:

• testing mailing communications relating to your existing products or services to a new target audience not previously mailed in relation to those existing products or services.. This target audience can be a cold/lapsed list not mailed within the previous 12 months.  A list of new names bought by the customer ("Mailing Lists") will not constitute a new target audience if the customers on the lists have the same profile as existing customers.
• testing mailing communications which relate to your new or redesigned products or services;
• testing mailing communications which relate to your existing products or services that you have not previously sold or advertised by post before;
• testing using a Royal Mail service that is more expensive than the one you usually use for promotional mailings (e.g. switching from Mailsort 3 to Mailsort 2);
• testing the effectiveness of promoting your products or services using a new design of mail pack in parallel with your existing mail packs. In this case the new pack should not be sent to more than 30% of the target audience.  The new design must include either a significant change in graphics or contents.
• testing the effectiveness of an increase in the frequency of your communications with your own customer base, in relation to an underlying change in your activity. There must be a significant change in the frequency and material that the customer intends to mail. e.g. the introduction of additional editions of catalogues or leaflets to test the potential of seasonal markets. Simply mailing the same material more frequently does not constitute eligibility for a TMI.
• testing the effectiveness of using direct mail plus at least one other medium (e.g. radio/TV/email/SMS/cinema) in a single multimedia campaign for the first time. No more than 15% of the customer’s total target audience for the single multimedia campaign will be eligible for a TMI.  In order for a marketing campaign to qualify as a single multimedia campaign, the customer must be able to demonstrate that direct mail will be used to reach the same audience (or part thereof) as the other media, with the same message (brand/product) at the same time (direct mail element must be within 4 weeks of the use of other medium element(s)).

Where you are considering one of the activities set out above Royal Mail may be prepared to offer you postage credit in relation to a proportion of your mailing so that you are able to test your proposition.  You may apply for more than one TMI if you wish to carry out more than one type of test although one mailing campaign can only qualify for one TMI.  Similarly as TMIs are to encourage and test the innovative use of mail they cannot be offered more than once for a particular type of test to your company or other companies within your Group.

Royal Mail may be able to offer you a rebate off standard postage rates for a limited period in respect of your new mailing activity.  This will be paid in the form of a postage credit, which will be paid into your account after postage and payment of the full price, and can be redeemed against a future mailing. The calculation of the postage credit depends on the service that you wish to use, and the level of commercial risk involved in your proposed activity.

Assessment of Risk
The assessment of whether the level of risk you are taking is medium or high follows the basic rule of thumb that, if you are targeting a new Target Audience with direct mail then that will constitute a greater investment risk for you than if you mailed an existing Target Audience, as you have no certainty of the level of response rate you can reasonably expect from those customers. Such a risk would be defined as high such that the discount available to you for a particular product would be greater than if you were mailing a pre-existing audience. Note however that it is still possible for a customer to mail an existing audience but with a new product or service, which it has not previously advertised in this way, and for it therefore to be also rated high risk in these circumstances.

The level of incentive
The level of incentive you could gain depends on the level of risk you are willing to accept in order to use mail in an innovative way.  Whilst the average discount offered is 10% for medium risk 1st class Presstream A3 packets the discounts range up to 7% and medium risk 1st class Packetpost returns could gain a discount of anything up to 15%.  As you would expect, high risk mailings mean higher discounts.  A high risk International Zone & Format mailing could qualify for a discount of up to 10%, whilst a high risk 1st class Packetsort mailing could qualify for anything up to 30%.  

The total gross value of potential mailings involving a TMI during 2010/11 was £8m and the potential Royal Mail credits were £800k equating to 10%. Over the same period Royal Mail offered 121 TMIs.

TMIs are available with STL, Mailsort, Walksort, Cleanmail, Packetsort, Packetpost Returns, Presstream, Mailmedia, Response Plus Services, Door to Door and selected international services.  The minimum claim eligible is £300 and the maximum postage credit available may not exceed £150,000.  The main details of these are set out below under General Rules and TMI criteria but, for discussion as to your precise eligibility for mailing using these specific services and to discuss what level of incentive your mailing would qualify for please contact your Account Handler.

We are prepared to share some of the commercial risk that you are taking because we think it will grow the use of mail as a medium in the long term. We will only grant a TMI where your proposal meets our eligibility criteria.

Single Mailing Campaign
A TMI can be granted for a single mailing that may be posted in several separate stages over the duration of the TMI, and which may include one follow up mailing to non-responders of an initial mailing; provided that the follow up mailing is sent to a maximum of 30% of the same customers to whom the initial mailing was dispatched.

Duration
The maximum period of time a TMI trial can last for is 6 months, although in exceptional circumstances, such as where a number of mailings were required to assess customer loyalty, we will consider longer trial periods up to 12 months.

Eligibility
The TMI application must state the expected number of responses and the expected response rate. This information is required to assess whether the TMI activity has been a success for the customer.

Every TMI application must identify the target audience and demonstrate the customer’s intention to make further mailings of a similar nature to the remainder of the target audience within 12 months of their last mailing under the TMI.  A target audience is a discrete, clearly identifiable class of addressees usually defined by reference to at least three common characteristics that must be relevant to the product or services being promoted to them.

Addressees on a mailing list that have not been mailed by the customer within the previous 12 months (“Cold/Lapsed Mailing Lists”) will constitute a new target audience.  Royal Mail will obtain previous mailing lists used by the customer to ensure that the customer has not mailed the addressees on the Cold/Lapsed Mailing Lists within the previous 12 months. In the event that such mailing lists do not exist, the customer must provide written assurance that the addressees on the Cold/Lapsed Mailing Lists have not been mailed within the previous 12 months.

TMIs can be used by a customer to mail to their existing target audience in the following circumstances:

• Mail a cold/lapsed list not mailed within the previous 12 months in relation to existing products
• Promote a new product / service
• Promote existing product not previously promoted by post
• Upgrading to a more expensive Royal Mail service
• Carry out a parallel testing of a new mail pack and the existing design of a mail pack
• To test the effectiveness of increasing mailing frequency (although not through simply mailing the same material more frequently)
• Testing media complementarity (i.e. comparing direct mail with at least one other medium)

If you think you might be eligible for a TMI and to find out rebate you could receive please contact your account handler or call 08457 950 950.

Royal Mail TMI Agreement (Opens in a window)

We have set out below a couple of examples of TMIs that have been given, so that you can get a flavour of what type of risk sharing we may be able to help with.

XYZ Company has developed a new product that it is intending to promote to 13 million customers.  XYZ proposes to use Mailsort 3 700 to mail a leaflet containing product information, competitions, offers, etc to 10% of these customers as part of a TMI, as a test to see what level of interest there will be.  The product has never been promoted by post before and the response rate to the mailing cannot easily be predicted. 

The test will not take place without TMI support and, should a TMI not be given, XYZ will use e-mail instead, with links to take their customers through to the relevant sections of their website.

Should the test provide a successful response rate, XYZ plan to make similar mailings to the remainder of the target audience, within a 12-month period.

A postage credit of £18,278 will be offered to XYZ Company.

ABC Company proposes to mail a catalogue to 175,000 customers by Mailsort 3 1400 over a 3 month period.  ABC is moving into an entirely new product area and the catalogue will contain its entirely new product range.

Previously only the over 30s have been mailed by ABC, but it believes this audience will be too old for its new propositions.  The under 30s will now be targeted for this mailing.

ABC has decided to test with a TMI following a number of meetings with Royal Mail.  Until now, this type of activity has never been envisaged because of the high risk involved.

ABC believes a 4% response rate would deem the test a success and has the intention to mail the remaining 1,575,000 customers in its total identified target audience base should this response rate be obtained.  ABC also intends to mail the target audience on an ongoing basis once it has seen this type of mailing works.

Royal Mail will award a postage credit of £4,000 towards ABC Company’s future mailing costs.